July 9th, 2014
Spotlight on Success: How Leah Improved Her Credit Score by 100 Points in One Year
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Recently, we introduced you to Tommy, who paid off his student debt years ahead of schedule. We’re back this week to share the story of another Credit Karma community member, Leah, who managed to take her credit score from tragedy to triumph.
Leah’s credit awakening happened at a critical time – while she and her husband were obtaining the mortgage for their first home, a cozy bungalow in Atlanta. Although Leah thought she had a great relationship with credit, she was alarmed to find that she actually didn’t have a score that would qualify her and her new husband for the best possible mortgage rates.
While she checked her credit reports yearly and saw no red flags, Leah didn’t know her actual score before applying for the mortgage. While still above average, her score would lead them to pay tens of thousands of extra dollars over the life of the loan – way out of line with the couple’s frugal lifestyle. They made the decision to proceed with the loan in her husband’s name only. Leah was heartbroken: “I’ve got to get on top of this,” she remembers thinking.
This incident prompted her to join Credit Karma and take control of her credit score. She was determined to never find herself in this situation again. Despite working in the financial world at an asset management company, Leah had been blissfully unaware of what impacts a credit score, just like many consumers. After looking at her Credit Report Card, she quickly realized her high credit card utilization rate was a serious turnoff to lenders—she had high balances on two 0% interest credit cards. While she wasn’t paying any interest, the utilization rates damaged her score. She immediately began focusing on paying down these debts.
Just a few months after paying down her credit cards, she began to see gradual improvements in her credit score. The average age of her accounts gradually increased, and a hard inquiry that was holding her score down started to carry less weight. A year later, her credit score is a full 100 points higher. By improving her score, she feels like she’s finally “earned” the home and interest rates she and her husband were given. Now, Leah can be confident that she would be approved for the best interest rates available. Leah and her husband have continued their frugal lifestyle and now she focuses on maxing out her IRA each year. “You have to approach it as a marathon, not a sprint,” Leah says of personal finance.
Words of Wisdom
Currently, Leah is a self-employed personal finance blogger and financial adviser, where she has been able to use her knowledge of credit scores to help others. She encourages anyone starting off on their path to financial enlightenment to dive in and learn what factors affect their credit score. Once you’ve figured out your “weak” areas that are holding your score down, it’s easy to get to work improving them. As we’re fond of saying at Credit Karma: knowledge is power.
Disclaimer: All information posted to this site was accurate at the time of its initial publication. Efforts have been made to keep the content up to date and accurate. However, Credit Karma does not make any guarantees about the accuracy or completeness of the information provided. For complete details of any products mentioned, visit bank or issuer website.
Kayleigh Gaddor is the Community Manager at Credit Karma. Not content to stay in one place too long, she’s most recently traveled to Hong Kong, Scandinavia and Hawaii. An avid reader and proud introvert, Kayleigh can usually be found with her head buried in her Kindle.
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